To form an LLC in Alabama, file Articles of Organization with the Alabama Secretary of State online or by mail. The state filing fee is $200. Processing takes 3–5 business days online. You also need a registered agent with an Alabama address, and must file an annual Business Privilege Tax return starting the first year.
Alabama LLC formation — step by step
Choose and check your business name
Your LLC name must be unique in Alabama and include "LLC," "L.L.C.," or "Limited Liability Company." Use the Alabama SOS business name search to confirm it's available. You can reserve a name for 120 days by filing a Name Reservation with the Secretary of State ($28 fee).
Choose a registered agent
Every Alabama LLC must have a registered agent — a person or company with a physical Alabama address available during business hours to receive legal documents. You can be your own registered agent or use a registered agent service ($49–$125/year).
File Articles of Organization
File with the Alabama Secretary of State online at sos.alabama.gov or by mail. The filing fee is $200. You'll need your LLC name, registered agent's name and address, and the names and addresses of members or managers. Online filing processes in 3–5 business days; mail takes 2–3 weeks.
Create an operating agreement
Alabama does not legally require an operating agreement, but every LLC should have one. It defines member ownership percentages, management structure, voting rights, and what happens if a member leaves. Without one, Alabama's default LLC rules govern your business — which may not reflect your intentions.
Get an EIN from the IRS
An Employer Identification Number is your LLC's federal tax ID. It's free from the IRS at irs.gov and required to open a business bank account, hire employees, or file business taxes. Apply online and receive your EIN instantly.
Get your business license
Alabama requires a state Business Privilege License plus a local license from your county or city. The state privilege license costs $10–$100 depending on business type. Most counties also require a local license — fees vary widely.
Open a business bank account
Keep your personal and business finances separate from day one. You'll need your EIN and Articles of Organization to open most business bank accounts. Mixing personal and business funds can expose you to personal liability — defeating the purpose of an LLC.
File the Business Privilege Tax return
Alabama LLCs must file an Annual Report and Business Privilege Tax return each year. The minimum tax is $100, due by April 15. The return must be filed even if your LLC had no income.
Alabama LLC costs
| Item | Cost | Notes |
|---|---|---|
| Articles of Organization | $200 | One-time state filing fee |
| Name reservation (optional) | $28 | Holds name for 120 days |
| Registered agent service | $49–$125/year | If using a service vs. acting as your own |
| Operating agreement | $0–$500 | Free if DIY; attorney or online service if not |
| Business privilege license | $10–$100/year | State license; local fees additional |
| Business privilege tax | $100 minimum/year | Annual; due April 15 |
| EIN number | Free | Directly from IRS at irs.gov |
Formation service vs. DIY: You can file directly with the Alabama Secretary of State for $200. Using a formation service like LegalZoom or ZenBusiness typically costs $0–$149 + the $200 state fee — they handle the paperwork and keep you from making costly errors. Worth it for most first-time business owners.
Alabama LLC vs. other business structures
Not sure if an LLC is right for you? See our full comparison of sole proprietorship vs. LLC. In short: an LLC provides personal liability protection that a sole proprietorship doesn't. If your business could ever be sued — and most can — an LLC is worth the $200 filing fee.